How Much Money Will You Take to Your Grave?

This is a timely post given some recent fear-mongering about mudslides, duck boats, and crazy talk about $2 Million being “nothing” in this day and age.

It’s also a good reminder that, in spite of a rough patch here and there (like the 6% decline in the S&P 500 over two days earlier this week), most well-prepared retirees in the past have ended up with much larger portfolios than they started with on their retirement day.

Dr. Jim Dahle believes in a four percent withdrawal rate as a great starting point, and he doesn’t see the sense in relying on something ridiculously low, like the 2% or 2.5% withdrawal rate I was planning on when I wrote my first investor policy statement.

Read on to learn how much money you might have left over for your charities or children if you follow a reasonably safe withdrawal rate pattern when retired. This post appeared first on The White Coat Investor.

How Much Money Will You Take to Your Grave?

I have been having a few thoughts lately about withdrawal rates, spurred by a comment on my previous post on the subject. Many investors don’t realize what usually happens in a withdrawal scenario. When they look at a Safe Withdrawal Rate (SWR) table like that from the Trinity Study, (reproduced below) they simply try to figure out how to have a 100% success rate (i.e. never run out of money.)

With our current low-interest rate environment, and many gurus projecting low future stock returns, some investors even argue that the Safe Withdrawal Rate should be 3.5%, 3%, or even 2.5%. I think that’s kind of silly for several reasons I’ve discussed before and will discuss again in this post.

However, what people DON’T really think about, is just how much money they are likely to have left if they go for a “100% success SWR.” In order to look at that, it is worthwhile looking at a paper by Phillip Cooley in the Journal of Financial Planning.

In this paper, Cooley et al included this table, which shows how much money you have left, on average (technically median), using any given withdrawal rate adjusted for inflation.

This table assumes a starting portfolio value of $1,000. So if you use a 4% withdrawal rate (adjusted each year for inflation) and a 50/50 portfolio, on average, after any historical 30 year period, you would be left with $2,971 at death.

That’s right. On average, you die with three times as much money as you had upon retiring. Even with a 5% SWR you will on average end up with more than you started with. Surprised? Don’t be. That’s just the nature of averages. That’s why it’s called a “Safe” withdrawal rate. It’s very safe. You can take out more money, and may even do okay, but that would be a risky withdrawal rate. You know, 6 or 7%.

Just for fun, consider a hyper-conservative investor who goes with the 3% SWR for 30 years and has a 100% stock portfolio. He ends up with 13 times as much as he started with…on average. Half of those guys ended up with MORE!

If your goal is to enjoy your money and use it to increase your happiness (and that of others) in life, then I would suggest that a withdrawal rate that is very likely to leave you with 10 times as much as you had on the eve of retirement is probably the wrong approach.

Six Other Reasons To Avoid Hyper-Conservatism

There are other good reasons not to use some ridiculously low withdrawal rate (like 2.5%.) You all know I like lists, so here’s another one.

# 1: You probably won’t live for 30 years after retirement.

Remember that if the odds of you running out of money in 30 years are 10%, and the odds of you actually living 30 more years are 10%, then your actual risk is 1%. That’s lower than the risk of an experienced mountaineer dying on Mt. Everest (1 in 64, it’s 1 out of 5 on K2.) At any rate, if you retire at 65, your life expectancy as a man is 18 years (20 as a woman.) Chances are not great you will make it 30 years. Now if you’re retiring at 45, then I think it’s a good idea to be a little more conservative, but you get my point.

# 2: Nobody actually follows a fixed SWR

Everybody I know in real life retirement keeps track of how they’re doing. If their returns are poor, they cut back, tighten their belt, cancel a few vacations, give less to charity, give less to heirs and make it work. When times are flush, they spend a little more. Retirement withdrawal rate researchers like Wade Pfau are starting to acknowledge this fact in their work, but real retirees like Taylor Larimore have known this for years. In a recent forum post, Taylor explained his simple strategy:

I retired in June of 1982 at the age of 57. We had about a $1 million dollar portfolio to last us the rest of our lives. I didn’t know about safe withdrawal rates (the Trinity Study wasn’t published until 1998). We had no computers, Internet, Monte Carlo, or sophisticated calculators. We only knew that we had to be careful to make our money last ($1M at 4% = $40,000/year before tax).

So what happened? We simply withdrew what we needed and kept an eye on our portfolio balance. Most years our balance went up and we spent the money on vacations, luxuries and charity. When our balance went down, we tightened our belt and economized. This is what most people do and it works.

Critics point out that Taylor retired into the greatest stock and bond bull market of all time. That’s true. But just because nothing bad (you know, like 1987, 2000-2002 and 2008-2009) happened doesn’t mean Taylor wasn’t prepared to economize in case it did. A million bucks in 1982 was no small portfolio. That’s the equivalent of $2.7 Million in 2018 money, far more than most docs retire with.

# 3: Most Retirees Spend Less As They Go

Retirement spending follows a curve where it is highest the first few years of retirement when lots of purchases are made and traveling is done and then gradually decreases until just before death, when it ramps up dramatically with medical and/or long-term care costs. So if 4% (indexed to inflation) provides plenty of money for those first 5 years, it’ll probably be more than enough for the 20 after that!

# 4: 75% Certainty Is Good Enough

The Trinity Study authors themselves suggest a 75% success rate certainty is “good enough.” Even William Bernstein, who is quite conservative with regards to future expected returns, has written that going for anything more than 80% is foolish because there’s a 20% chance of your country imploding at some point during a 30-year retirement.

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Well, 75-80% certainty over a 25-30 year retirement for a portfolio of 50-75% stocks corresponds to an SWR in the 5-6% range. That’s 25-50% more money to spend each year in retirement. That’s hardly insignificant.

# 5: Your AUM Advisor Has A Serious Conflict Of Interest

Your advisor, especially if paid a percentage of assets under management (AUM), may suggest you only withdraw 2.5-4% of your portfolio each year. However, always remember his or her bias.

First, the larger your portfolio gets the more he gets paid. The biggest threat to your portfolio as a retiree is you spending it! So if he can keep you from spending it, his paycheck gets larger. AUM fees are the best kind of passive income!

Second, he’s only going to get in trouble if you run out of money and live a long life. If you die with lots of money, nobody is going to get mad at him. But he could really care less how often you go on vacation, how much you give to charity, or how comfortable your retirement is. Higher portfolio withdrawal rates are all downside to him, whereas they are a mix of upside comfort and downside risk with you.

# 6 You’re Probably Too Conservative Already

Those who acquire large nest eggs and those who read financial blogs like this one are honestly very unlikely to ever run out of money. It is really hard to go from saving and investing during the accumulation stage to actually spending your money in retirement.

My parents have been fully retired for several years now, living on a pension. My dad is now taking Social Security. If it wasn’t for the IRS mandated RMDs, I don’t think I’ll ever get them to start spending anywhere near 4% of their stash each year. They didn’t become affluent by being spendthrifts, and who is going to change habits after half a century of living?

WCI’s Dad out turning money into happiness flying to his favorite hunting spot

One Invalid Reason

Some think it reasonable to increase the SWR because the original Trinity Study used large cap equities only. However, I think that’s probably not valid. Yes, they used only large cap equities, and small cap and value equities probably have a higher expected return.

However, they also used long-term corporate bonds- not exactly the short term treasuries that many investors are using today in their portfolios. While none of us really know what to expect out of equities in the future, bond returns over the next 5-30 years are very likely to be lower than they have been over the last 30 given the interest rates we are starting from. Those two factors probably cancel each other out…at best.

The other factor that far too few investors take into account is the effect of advisory and other portfolio fees. If you’re paying 1% in fees, your 4% is really 3%.

[Update: I was challenged by someone who cited Kitce’s study about how a 1% AUM doesn’t lower your SWR by a full 1%. I found the argument weak in that it certainly DOES lower your withdrawal rate by 1% of your assets in year one and that whether it lowers the SWR by 1% or not, it still lowers the amount of money you have to spend by the amount of the fee, which is really the point of my statement anyway.

Why any retiree would consent to have 1%+ AUM fees assessed against their portfolio when there are asset managers willing to do it for far less (or even a flat annual fee of just a few thousand) is beyond me, but I’m sure there are plenty of retired docs out there paying $20K+ a year in asset management fees.]

The Bottom Line on Safe Withdrawal Rates

As I’ve said many times, the point of the Trinity study wasn’t that the SWR is 4%, it was that the SWR is not 8%, 10%, or even 12%. Start with something around 4% and adjust as you go. Staying flexible is immensely valuable both in increasing your ability to spend as well as decreasing your likelihood of running out of money if you are lucky (unlucky?) enough to live into your 90s. Better yet, put a floor under your spending with Social Security, pensions, and perhaps even a SPIA or two and then have at it with your portfolio withdrawals.

What do you think? Were you aware that most who followed a 4% SWR rule die with more than they started retirement with? How are you (or how do you plan to) managing your retirement withdrawals? Comment below!

40 comments

I think the role of “adjusting to fit the circumstances” is significantly underplayed. It’s what we’ve done our entire adult life.

How else did we “adjust” to be able to save/invest enough to have the nest egg to begin with?

I believe the biggest threat, that is rarely discussed…is early cognitive decline. In observation of those further along…I notice that some begin to make poor decisions. An elderly parent may co-sign a loan for an irresponsible child, or give money to the grandkid “because I have to have a car to go to work”. Those “dings” can significantly erode your nest egg.

Any thoughts/suggestions on how to protect your assets during the years when you are still independent, but maybe not quite as sharp as when younger?

I think a combination of a written investment plan, and involving your partner if you’ve got one, is a great start.

A “legacy binder,” put together when one has all of his or her faculties intact, can come in handy in the event of an untimely demise or cognitive decline.

I agree that our ability to make adjustments on the fly is underappreciated. The more fluff you have in the budget, the more room you have to cut back if you feel it’s necessary. Most readers of this blog will have a fair amount of discretionary expenses in the budget.

FIRE individuals I think tend to be more conservative then most. We plan and plan and plan for detrimental events (sequence of return risk for example) and create contingencies to counter them.

Overall this means that the majority of these people will indeed end up having more money then they started out with at retirement. It definitely is not the end of the world as this money can then be passed on to heirs or donated.

The ability to adapt is the strongest point made above. No one is forcing you to take out 4% or whatever you go with as a safe withdrawal rate. Even when mandatory RMDs kick in you don’t actually have to spend what you withdraw and can reinvest that money.

My philosophy is probably more conservative than needed as well and that is trying to create passive income streams that will cover the majority of my basic needs in retirement allowing me to preserve capital even further.

Yeah, it’s funny when some of the most well-prepared, fiscally responsible people are ridiculed as taking drastic risks and doomed for failure. Really?

I have a feeling most of us will be trying to figure out what to do with all that RMD money. Although, we may have already converted it all to Roth by the time we’re of RMD age, anyway. You can also donate your RMD without it ever touching your bank account.

I stopped putting money into retirement plans at the end of 2013 when I was FI and started to work part time. I left medicine in Feb of 2017 and have been living off my investments and some new income as an author/coach. I have seen a significant increase in my net worth during this time. It seems I could afford to spend a lot more than I do spend in my retirement years. I suspect that will not change. Even knowing this, I’m still likely to not increase my spending and will die with way too much money in the bank. It was nice to see that the charts support my decision to keep 100% stock in my retirement portfolios. 98% chance of lasting 30 years and on average I will end up with 10x more than I started with. Maybe I should spend some more?

Given the fact that you’re traveling in style 6 months of the year, I don’t see a need to spend more — you seem to be living a great life as is.

While your investments are 100% stock, you’ve got plenty of “fixed” income coming in via rentals. That’s a decent substitute for the more conservative portion that most of us will have in our portfolios via bonds, CDs, etc…

Yeah — I couldn’t figure out why my parents’ financial advisor had them take Social Security early at 64 when they had plenty of money invested and passive income to suppport their desired lifestyle in retirement.

Then it hit me. The more that comes in from SS, the less comes out of the portfolio, and the higher the income for the advisor based on the AUM fee.

WCI is always the sober voice in the room. There are so many good options to consider when it comes to deciding on a safe withdrawal rate. To prevent having to tighten your belt when the market gets rocky, there are other options like adding a SPIA for income. That is an option that I am considering when RMD’s are required.

The “safe withdrawal rate” is just a start. We suggest clients start with a withdrawal rate that is likely to match their life expectancy with a reasonably high degree of safety (say 4% for a thirty year life expectancy).

I’d also argue that one or both members of an educated fit couple in their 60’s will live that long or even longer.

We then follow portfolios keeping the “sequence of returns” in mind (worth googling if you don’t know about it). Those families with strong returns early on are told that they can increase their distribution rate. Those with poor early returns are told to at least stay the course. And of course, modifications are made based on health, etc.

I agree. It’s really the first 5 to 10 years after you cease earning an income that matter most.

If you want an early retirement plan to be as bulletproof as possible (increasing the likelihood of a large estate later on), get your 25x to 30x in anticipated expenses, set it aside, and come up with a plan to cover your expenses for the first 5 or 10 years without touching the nest egg. That could be a second pile of money invested conservatively or any passive or active income stream that covers your living expenses for those initial years.

I struggle with this because I don’t want to die with millions left in the stock market, but since I am W2 and subject to AMT, I will likely be forced to take the standard deduction and won’t get any “credit” for donations. PoF any thoughts on lumping together a few years worth of donations and making them all on a specific year so you get above the standard deduction? Or am I just wrong about the AMT?

I was subject to the AMT for each of the last 10 years, but now that the TCJA drastically changed the formula, it’s unlikely that you or I will have to pay the AMT again.

Last year was the best time to start a DAF, as tax rates were higher, but I would say the second best time is now.

In our situation, the first $14,000 donated won’t give us any benefit ($24,000 standard deduction versus $10,000 I can deduct for state income & property tax). I will probably add to our DAF with a six-figure sum at a time.

A huge fallacy of the 4% SWR is that the study didnt account for fees and taxes. It assumes index performance for stocks and bonds, and in decades past investors couldn’t achieve those returns (still can’t completely even today, though with index fund fees hitting zero,getting close!).

With fund fees of at least 1% per year, loads of 5-8.25%, no tax sheltered IRA accounts, and tax rates on dividends and cap gains much higher than today (income rates for dividends), the more likely performance of portfolios was at least 2% per year less than those used for the study.

Thus, rather than assuming a 60/40 portfolio earning 10% for stocks, 6% for bonds, or 8.4% total, with inflation averaging 3%, or a 5.4% real return, reality would have been something closer to 6.4% net or 3.4% real, which would drastically lower SWR, below 4%. Even though fees and taxes are lower now, and of course we have tax deferred retirement accounts, our expected asset class returns are lower now too, perhaps 6% for stocks, 3% for bonds (at current rates), giving a 60/40 portfolio an expected 4.8% gross notional, and with 2% inflation, 2.8% real, without accounting for at least some fees and taxes. Thus, still bleaker than the more properly adjusting results that the Trinity study should have used.

Bottom line, start with 4% withdrawals if you want, but don’t expect the same success rate as the past, nor likely accumulated wealth at death..

Anyone doing planning based on their annual expenses should be factoring in all forms of expenditures, including investment fees and taxes. The original study from William Bengen does factor in taxes, assuming that all funds are held in tax-deferred accounts.

“Note that since we are assuming that all retirement assets are held in tax-deferred accounts, capital-gains taxes are not a concern. If the assets had been held in a taxable account, the conclusion might have been different, as the certainty of substantial capital-gains taxes would have to be weighed against the probability of a large stock-market decline, and the loss of the benefit of a step-up in basis upon death.”

More recent work, such as that from Pfau, does factor in invesment fees, which is why he quotes SWR closer to 3% than 4%.

By sticking with mostly index funds, my fees are under 0.1% and less than 20% of our dollars are tax-deferred. Everyone should be looking at these factors, along with their own perceived risk tolerance, before determining the initial withdrawal rate they are comfortable with. There are also future benefits (Social Security) that most early retirees tend to ignore, that could provide an additional buffer later on.

We’ll have an 80K pension and 2 social security distributions in retirement, and I don’t think we will need much more than that. If we stay the course, the future value of our 403b, 457, 401a, etc. accts is going to be in the 4-5M range. What should we do with the RMDs? Just reinvest in the same type of index mutual funds?

If you’re not donating generously already, the year in which you turn 70.5 may be a great time to start (if you’re into that sort of thing). You can donate your RMD directly without ever seeing the money or paying taxes on it. If you don’t want to wait that long, I’d consider starting a DAF sooner than later.

Thanks PoF! We’ve been giving to various schools, but will plan to make more substantive donations to our favorite museums and national parks over the next 5-10 years before retirement. I’ll have to look up the details on DAFs.

As always this is a great topic. It reminds me of an experience I had in 2014 when I fired my AUM advisor. He told me that based on complex research and analysis that his group had concluded equities would not grow by more then 3% a year over the next ten years. He suggested I convert a large part of my portfolio to an exclusive real estate opportunity that would guarantee me 5% year locked in for the next 5 years. I was planning to fire (small caps) him anyway but that tipped me over the edge after I listened to him wax poetic about a diversified portfolio and risk tolerance for years.

Most if not all of us who subscribe to the the FIRE and passive investing philosophy believe that no one can time the market or predict its short or longterm outcome. I don’t know if trinity used too robust an expectation for returns as none of know what will happen tomorrow or 5 years from now. We can all apply some of our own hypothesis on interest rates, bond yields, inflation etc but the reality is if any of us could predict the future we would be Jim Cramer (joke). History has shown that in general the markets will go up over time and if you can stomach the volatility and short term uncertainty that most of us will be okay. Sequence of returns does matter and is why I am not retiring today although at 51 and a net worth of 8 million even after the last few days most of you would tell me I am way past FI.

One simple comment is that based on inflation and the present value of money most portfolios should be worth a lot more 30 years from now. I paid $350 a semester to go to Cal Berkeley in 1986 and am paying 75k a year for my daughter to go to an elite east coast college. My dad is a retired radiation oncologist and I make about double as a cardiologist as he made back then. He made less but was probably relatively much wealthier then I am now. Despite that we are in an interesting time with cheap food, energy, and products from China. I am more concerned that the US may be on the decline economically relative to other countries and I am not sure how to calculate that into the analysis. I think the key is to live below your means and be prepared for the unexpected.

Unfortunately, we cannot take money to our grave. 75 percent certainty is not good enough for me though. Perhaps 90% . I do agree with the rest of the post though. We overthink everything. We started with FIRE, then fat FIRE, then super mega fat FIRE. It might just be a way to keep ourselves interested in continued savings.

I think the 4% rule is good enough based on the data provided. One can still adjust with the situation at retirement. If you cant afford that 4 vacations a year, one can modify that

My principle is to make as much as I can. So, more likely going to retire with more than enough. All things equal.

If 90% odds are good enough, you should be good to go with a withdrawal rate > 4%. Lots of people will tell you’re crazy, but I think it’s reasonable as long as you understand the risks and have a plan to change course if your odds of failure look to be increasing with a poor sequence of returns.

Great article and discussion on this topic. I never thought about the chances of ending up with more than I started with.

I do think an SPIA is extremely helpful in covering your downside risk. They also sell longevity insurance which I’ve always been intrigued by. It’s a single-premium annuity, but it doesn’t kick in until you reach a certain age, say 90.

That way you can spend all the way down to a specific age, assuming you don’t kick the bucket first, and then the annuity kicks in until you’re 6-feet under. Lots of good options for the informed!

There is some comfort in knowing that a guaranteed income will be there even if you do outlive your retirement savings. These products (SPIA in particular) can be helpful for people who have a hard time giving themselves permission to spend some of their hard-earned money.

PoF, I remember a few years back, just as your blog was starting up, we discussed a much smaller withdrawal rate for you. I think you were talking about 2.5% back then, maybe 3%. Obviously you have changed your mind. We even discussed some of the arguments you have above. I am very curious since back then you already knew all those arguments what has changed to skew your thinking?

BTW, just the other day on bogleheads one forum member was talking about 0% returns in the future. That is by far the worst case of fear I have ever seen. What calmed your fear which now in hindset may have seamed irrational?

I ask because we are on the verge of FI and as we discussed back then, we will be going part time in 2019. Part of our decision is because we believe we still enjoy our jobs and don’t want to lose our skill. Another part I must admit is a bit of fear. I think going part time and transitioning that way will help calm those irrational emotions. Kind of like a titration process.

My first IPS talked about saving up a 40x to 50x sum before calling it a day. Not so much because I felt I would need that much, but because I still like working enough that a few more years to go from 25x to 40x or more was worth it.

I’ll be leaving my job in 2019, or about 4 years after knowing I was financially independent. Depending on how the market performs over the next year and how much we end up spending on healthcare, we may actually end up with that 40x or more by then.

Since I started my site, ERN wrote his SWR series and I’ve realized that a starting withdrawal rate of about 3.5% or less gives us a very low chance of failure. Making money via a side gig (this site) has also further lowered my risk.

For some reason, I thought you had already cut back to part-time. It’s been a year for me now, and it’s been a great transition.

Sorry, I guess I should have realized this was not your post but WCI’s. Yes, I went part time and the company started giving me more non-clinical responsibilities which ended up taking more time. They were paid duties and fun at first, but after a while they started to become very tedious, not fulfilling and taking up way too much of my time while adding unnecessary stress. I kindly requested that I be removed from those duties by the end of the year.

Being financially independent (sort of) allows us to stop doing things that have little to no value and don’t make us happy.

We realize that working part time will have us far exceed 25x. Our plan is to increase our spending as our wealth increases on items that can easily be cut if need be during a downturn. Items like an extra vacation, remodeled kitchen, or maybe a dedicated track car etc. I think having a 2% baseline spending and the rest is discretionary spending practically guarantees success and likely increasing our wealth as years go by.

We’re in a similar spot. Having FI has made it easier to give myself permission to spend. Before, I wasn’t done saving for retirement, and any money spent would mean having less money later on.

Now that I understand that we’re comfortably FI, it seems less wasteful to spend money on things we want. By the end of the week, we may have a vehicle capable of towing an RV. We weren’t planning to buy that just yet, but a neighbor is interested in our current familymobile, so we just might give them a great deal and upgrade our ride.

I hope to put all my money into charity when I go, but I don’t take anything out of my investments, I live quite well on dividends and social security. Now I am quite frugal and somewhat handicapped so travel is out for me. I clear over 4% on my invested amounts, but that is somewhat luck as I invested at the bottom of the market for dividend payers.

I like your style, Vulcan. You probably do this already, but is giving while still alive and able to see the impact of your dollars a part of your plan, as well? I’ve been building up a donor advised fund while working to have a giving fund that will allow us to give generously when our income is leaner.

I’ll assume you’re talking to WCI — it’s his post, but you’re right about risk. Some people can stomach a 20% risk of having to make adjustments to their retirement plans. Some would rather not.

When you earn a high income (as physicians generally do), I think it makes to work “one more year” a few times to reduce that risk from 20% to maybe 2%. You can never make it zero — find a number you’re comfortable with and do what makes you happy.

I missed the WCI part sorry. People can do what ever they can convince themselves to do IMHO. Not taking sides. Retirement planning is not about politics and pissing contests, too much is on the line. We share what we know and believe with good cheer. I sent Michael survivors some dough through my Church. My house burned down Christmas Eve in 1989 and I KNOW what they are feeling, the chaos and disorientation and to not even own a toothbrush. When I burned down some people helped me out.

I like the point that most retirees spend less as you go. Very true from what I’ve seen of friends and family. It looks like the desire to go on lavish vacations or buy a bunch of new stuff seriously fades as time goes on. As you also said, I’m already pretty conservative to start with, so I’m sure I’ll be quite the spendthrift as an old man! Appreciate the article!

i’m not a doctor nor do i play one on tv. that being said i enjoy these types of discussions about leaving money on the table. while we’ve never felt deprived with our dual middle class incomes i am loathe to leave too much at our deaths. we’re kid-free so that’s not a consideration and i would love to enjoy as much of our hard earned money as possible. thankfully we’re s.s. eligible in 7 and 12 years which will be a nice floor under our incomes as mentioned. i like the possibility of the simple annuity concept. we’ve led pretty simple lives and doubt we would even be able to spend more than 70k /yr in retirement.

here’s one for consideration though. first, we’ll likely “glide” into retirement by investing less and enjoying more money in our 50’s and good health while working the next couple/few years. i think about the concept of withdrawing a percentage but not spending it all each year and building up cash up to 5 years expenses, taking some market risk off the table and exchanging it for inflation risk. when you have enough dry powder you can always re-enter the market in case of a huge sell-off. cash in the bank has always helped me sleep at night.

i like the assets under management point. what a racket. maybe i’ll start advising and get that 1% of other people’s gravy to supplement. nice article.

Hi POF, Very interesting article. I think a great illustration of the main points you laid out can be seen the Rich, Broke or Dead calculator:https://engaging-data.com/will-money-last-retire-early/ It shows your portfolio probabilities based on historical returns but overlays that with the probability of mortality based on age.